Branding & Marketing Series for Restaurants Episode 9 [Video]

Market segmentation analysis is basically the process of grouping customers into segments who share similar needs. It can be done in basically two approaches – either through common sense segmentation or data driven segmentation. One leans more towards being intuitive and another leaning towards customer survey and analytics.
The step-by-step process of MS analysis goes like this:
First step is to decide what not to segment. We might think like our restaurant is for everyone and that might even be the case. However, let me give you an example. If your restaurant is a family theme restaurant and the food is prepared accordingly, the seating is arranged accordingly, the music and the ambience is set accordingly. If in this restaurant, youngsters and college students start to hang out more, the whole restaurant will fall apart.
This could mean two things. Either the area that the restaurant is opened has a lot of foot traffic from students which means there are colleges and universities nearby. Or, maybe the restaurant attracts more younger people as opposed to the customers we are targeting.
Second step is to sketch your ideal segment. Whom do you want to target? Make a detailed customer profile which describes their age, gender, hobbies, income level, preferences and so on. The more precise it is, the easier it is to find those types of customers for the restaurant. Once you have an idea on whom to target, you should start collecting data.
You can either hire a sales team to gather information around the locality or do it yourself. Prepare a questionnaire which contains questions which ends in Yes/No answer or rating from 1 to 5 scale. Have specific questions which will help you to understand the customers and their preferences.
Then you start to go through that data and see whether there is a market for your target audience. For example: If you have a question on whether they prefer family restaurants over other restaurants, and the majority answered No. You might have to avoid opening a family theme restaurant as there isn’t much market for it. You can also decide to go against the data and open a family style restaurant that challenges the traditional notion.
Moving on, we now have our hypothesis on what we want and also what the customers want. We will try to overlap the common theme and then work for the remaining ones. Suppose your target audience is office workers and a lot of office workers actually love the idea of having a restaurant which caters to them, this is a plus sign. You have just proven your hypothesis and now you can focus on other aspects such as lighting and seating and so on.
Once you have selected the target segment, we start developing a marketing mix for that target segment. Marketing mix, commonly known as 4P’s, focuses around price, place, promotion and product. Having a target segment will make it easier to build upon these marketing mixes. For example: Knowing that our target market is office workers and business people, we can increase the prices of the food since they are willing to pay more than the average consumers. We can open restaurants near offices and corporations to increase foot traffic. We can promote our restaurants by introducing special offers and packages for office people. We can sell healthy food items knowing that office people need to work longer hours and need carbs.

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